Maintenance on the pipeline, which carries Russian gas directly to Germany, began on July 11, but Berlin counts the gas as being used by the Kremlin to exert political pressure on the West, which Moscow has denied. read more Here are some of the risks if the shutdown period lasts longer or the pipeline reopens with reduced flows. Sign up now for FREE unlimited access to Reuters.com Register
WHY IS NORD STREAM 1 SO CRITICAL?
It is the largest single route for Russian gas to Germany, bringing 55 billion cubic meters (bcm) annually. Germany consumed 100 bcm last year. Russian gas transits through Poland have stopped this year, and those through Ukraine have been curtailed by the war. Half of German households rely on natural gas for heating, particularly from October to March, and the failure to restart Nord Stream 1 will scrap plans to fill underground gas storage before winter. The caves could theoretically meet national demand for 2-1/2 months, but are only 64.6% full, compared to the Oct. 1 target of 80%. Meanwhile, the market for alternative sources of natural gas is tight globally and prices have soared since last year as demand recovers from the pandemic.
HOW AND WHEN WILL GERMANY LIMIT GAS TO CONSUMERS?
If Germany activates the emergency phase of a three-stage scaling-up plan, grid regulator Bundesnetzagentur will be tasked with ensuring that natural gas is distributed fairly. The stage would be triggered by extremely high demand for natural gas or a significant supply disruption, for example if Nord Stream 1 remained closed. Germany has been in the second stage since June 23, after Nord Stream 1 volumes were reduced to 40% of capacity. read more
WHICH SECTORS ARE MOST AT RISK?
3D printed natural gas pipes are placed over displayed German and Russian flags in this picture taken on January 31, 2022. REUTERS/Dado Ruvic/Illustration read more Chemical, steel, glass and paper producers are Germany’s top industrial consumers of natural gas, but the impact would extend to food and porcelain production. read more The aluminum industry, with sales of 22 billion euros and 60,000 employees, relies on gas for smelting and recycling. In the paper industry, with a turnover of 15.5 billion euros and 40,000 employees, operators say paper and board are vital for food, medicine and hygiene.
WHAT ARE COMPANIES DOING?
Germany’s biggest natural gas importer Uniper ( UN01.DE ) asked for a government bailout that a political source said was worth 9 billion euros, and other utilities could face similar problems. read more Steelmaker Thyssenkrupp ( TKAG.DE ) is drawing up plans for shutdowns, a spokesman said, as it is unable to use oil or coal instead of natural gas. If certain minimum allocations are rejected, Thyssenkrupp plants may have to close and technical damage to aggregates is possible. Cutting the gas supply to aluminum plants by even 30% would mean half of them would be idled, says industry group Aluminum Deutschland. Prominent players are Hydro Aluminium, Speira and Trimet. Chemicals giant BASF ( BASFn.DE ) needs to keep natural gas supplies at about 50 percent of peak demand, and the disruption of Russian flows will trigger a company-wide contingency plan. The leading paper companies are Stora Enso ( STERV.HE ), UPM and Mitsubishi Hitec Paper Europe.
WHAT WILL HAPPEN TO THE ECONOMY?
In its bleakest forecast yet, Bavarian industrial group vbw said the country could lose 12.7% of its economic output in the second half of 2022 if Russian gas supplies were cut off completely. read more
WHAT ARE THE SOCIO-POLITICAL RISKS?
The social dispute over natural gas could give a boost to populists on the far right and far left of the political spectrum, potentially eroding rational discourse on how to proceed. Berlin passed a law that keeps open the options to pass on high prices directly or alternatively seek to spread the increases more broadly among users. read more Sign up now for FREE unlimited access to Reuters.com Register Reporting by Vera Eckert and Tom Kaeckenhoff, additional reporting by Patricia Weiss, Ludwig Burger, Christoph Steitz, Tom Sims, Hakan Ersen Editing by Kirsten Donovan Our Standards: The Thomson Reuters Trust Principles.
